Andy Bord is Chief Executive Officer at Flood Re, the reinsurance company. He was previously CEO at Capita Insurance Services, and held senior positions at Staysure, BGL Group, and Vodafone UK.
The key change is recognising the existing level of diversity within the board, and particularly cognitive diversity. Who is thinking in the same way as everyone else, and how is that groupthink leading to suboptimal decisions?
Secondly, is the board striking the optimum balance between what it has to do about challenging the business — the governance angle — and championing the business — the outcome angle? An effective board, particularly if it’s diverse in a thinking sense, should be able to find an equilibrium, and recognise that a governance-related decision should be approached differently than one that is more strategic in nature. Part of the solution can be as simple as organising the packs in the right way — topics can sometimes be conflated, when they should be separated.
The agenda is critical in that regard. At Flood Re, our Company Secretary keeps us honest — and has us do the things that must be done at certain times of the year — but our Chair and I are the ones who jointly set the agenda. During that time, we have a very candid conversation about what each of us wants to achieve from each of the items — which generally are aligned, but where we might have different takes.
Financial Services boards have changed post-Global Financial Crisis, and what it means in practice is that they have become more focused with that governance tip of their remit. The challenge to the board — and the Chair in particular — is not mistaking process for substance and taking false comfort because we’ve ticked every box.
We need to ask if we actually end up with the decision that we all buy into, or if we are just satisfied with our choice because we have fulfilled our statutory requirements. And are we getting the full value the board can bring to the actual debate — and therefore decision making — or is it a hoop I need to sign off my decision so I can continue doing my plan regardless?
I like detail, it’s more data to support decision making, but detail is only useful if it’s providing relevant information. The key is making it accessible so that the insight is clear and the irrelevant is always filtered out before it gets to the board.
It can be a challenge for properly diverse boards, where experiences differ and not everyone will be a subject expert. It’s up to the CEO to determine the level of detail going to the board and committees, giving them what they need to both fulfil their regulatory obligations and support their decisions without drowning them in information.
It’s in the category of proudest, as opposed to smartest.
Vodafone were acquiring the company I was with at the time, mainly because of our customer book. Through the integration activity, I was able to persuade them that we, as the acquired company, were better on most commercial and operational metrics than they were… so they changed their plans and retained our Stoke-on-Trent site and the 1,400 people that I had doing customer and dealer service support — and Vodafone are still there to this day!
I don’t believe that boards, as an entity in their own right, are inherently out of touch, but I think a number of individual boards are — or would be perceived as such by an external observer. Most notably, there still are some decisions or categories, such as executive remuneration or a lack of an explicit link between results and compensation, where boards need to make sure they are in touch with society. For these, I recommend the “Daily Mail test”: when you come to a decision, does it pass that common public sense test?
Adding employees or millennials to boards isn’t a silver bullet either. It goes right back to the diversity point: if they have been in the same company and have heard the same rhetoric, they still have the same risk that they will contribute to the problem of groupthink.
By providing certainty and consistency — a somewhat predictable answer at the moment, given where we are with Brexit, but I think it actually applies all the while. Most business can cope with more or less anything, but they struggle when operating in an environment where the goalposts are moving, even more so when they’re moving constantly, to the extent that you don’t even know which end you are supposed to be scoring!
Part of the role is about providing clarity and being able to distil the complex down to the simple, for whatever group of stakeholders — shareholders, employees, customers…
But, equally important, is delivering that clarity without being overly rigid. Some CEOs are brilliant at absolute clarity and vision, but their unbending vision — despite the compelling weight of evidence that some of it is wrong — is not the sign of a good CEO. It’s the sign of someone who’s really great at communicating their message, rather than (re)thinking the message.
So I think it needs to be a combination of humility and arrogance at the same time — call it “humble arrogance.” You’ve got to be assertive around what we’re going to do, why we’re going to do it, and what the outcomes are going to be; but be sufficiently humble to understand that you might know only 10% of that picture, and not the “how” and the “what” which are the other 90% — and hire brilliant people whose job it is to work out just that.
I’ve just finished Origin, a Dan Brown book — which is the same formula as every other Dan Brown book, but is quite good fun and dead easy to read if you’re ever on a flight or a beach.
It’s somebody else’s rule but it really stuck with me from the early stages of my career: don’t be negligently compliant. It’s often easier to simply tick the boxes and do what was asked of you, rather than push the boundaries to achieve the right outcomes.